Strategic Orientation, Corporate strategy and firm performance: The case of Wilderness Holdings Limited
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African Journal of Hospitality, Tourism and Leisure. ISSN: 2223-814X
June 2021, Vol 10, No 3, pp. 912-931
Strategic Orientation, Corporate strategy and firm performance: The case
of Wilderness Holdings Limited
Jaloni Pansiri *
Department of Tourism and Hospitality Management, University of Botswana, Gaborone,
Botswana, Email, pansirij@ub.ac.bw
*Corresponding Author
How to cite this article: Pansiri, J. (2021). Strategic Orientation, Corporate strategy and firm performance: The
case of Wilderness Holdings Limited. African Journal of Hospitality, Tourism and Leisure, 10(1):912-931. DOI:
https://doi.org/10.46222/ajhtl.19770720-140
Abstract
This study investigates the growth of Wilderness Holdings Limited from its inception in 1983 to its entry into
international markets. Using document analysis, the study identifies strategic orientation, and new market entry
as two major ‘tipping points’ critical to WHL growth. This study found that WHL used vertical integration,
acquisitions, downscoping, strategic alliances and partnerships to propel new market entry into eight countries in
Africa. Its growth over the years was complex and possibly unique to itself specifically in respect to how
downscoping and acquisition can be used together to propel growth. From a loss of BWP4, 967,000 in 2009,
WHL’s profits reached BWP62, 751,000 in 2018. While WHL’s strategy may not be copied, it is essential for
firms to blend different strategies in a manner that would lead to growth. However, the limitation of the WHL’s
strategy is that it ultimately leads to over-diversification, unless downscoping is equally intensified.
Keywords: Strategic alliances; downscoping; acquisition; diversification; organizational life cycle
Introduction
Wilderness Holdings Limited (WHL) is synonymous with the history of tourism in Botswana.
While systematic tourism management in Botswana started with the Botswana Tourism Policy
(Basupi, Pansiri & Lenao, 2017; Republic of Botswana, 1990) and other significant milestones
such as the Botswana Tourism Master Plan (Republic of Botswana, 2000) and the Botswana
National Ecotourism Strategy (Republic of Botswana, 2002), WHL began its operations as
Wilderness Safaris in Botswana in 1983 (Wilderness Holdings Limited, 2010a, 2016c). It was
listed on the Botswana Stock Exchange (BSE) to form part of the currently (2019) 36 listed
companies in Botswana (Botswana Stock Exchange, 2019), with a secondary listing on the
Johannesburg Stock Exchange (JSE) on 8 April 2010 (WHL, 2010a; 2010b). WHL has grown
significantly to become a major international tourism business participating in major markets
in Africa such as Botswana, Republic of Congo, Kenya, Namibia, South Africa, Seychelles,
Zambia, and Zimbabwe (WHL, 2015). This growth was propelled by a robust vertical
integration model supported by acquisitions of subsidiary companies, strategic alliances, and
partnerships as corporate level strategies for market entry in international markets (WHL,
2010b).
WHL has grown from BWP868 million revenue with BWP48 million profit after tax in
2010 (WHL, 2010a) to BWP945 million revenue with BWP76 million profit after tax in 2015
(WHL, 2015). It has achieved an average of PWP1, 059,551.13 million revenue and BWP54,
912
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365.875 profit after tax for a period of eight (8) years between 2010 and 2017. It has also grown
from 938 employees in 2010 to 2 580 in 2017 (WHL, 2015, 2017). The objective of this paper
is to analyse WHL’s strategic orientation leading to these growth trajectories ever since WHL
was listed on the BSE. In doing so, the paper shows that WHL did not develop according to a
pre-set sequence of stages, but through its own unique series of stable and unstable states
(Gupta, Guha & Krishnaswami, 2013; Phelps, Adams & Bessant, 2007) propelled by deliberate
and well considered strategies based on an entrepreneurial vision focused on international
growth.
Theoretical overview
Many models have been used to explain developments in organisations. A number of process
models have been proposed “such as developmental models (and their subcategory, stage
models), cyclical models, evolutionary models, chaos models, complexity models, system
dynamics models, game theory models, path dependency models, historical/case studies”
(Stubbart & Smalley, 1999: 273); life cycles models (Beverland, 2001; Gupta et al., 2013;
Phelps et al., 2007; von Wobeser, 2016); and states framework for firm growth (Gupta et al.,
2013; Levie & Hay, 1998; Phelps et al., 2007). A prominent model, the organizational life
cycle has been used to explain organisational development over time (Nazzari & Foroughi,
2007). It argues that the growth path or changes that occur in organisations follow a fixed
sequence of static and linear or predictable pattern that can be characterised by predictable,
programmed developmental stages (Gupta et al., 2013; Stubbart & Smalley, 1999).
The organisational life cycle theory heavily relies on biological science, and treats
organizations as if they were some kind of living organism whose development is through some
stages of life (von Wobeser, 2016); that “like people and plants, organizations have life cycles”
(Lippitt & Schmidt, 1967: 102). According to the organisational life cycle, firms go through a
sequential progression through stages such as birth or start-up, growth, maturity, and even
decline (Rutherford, Buller & McMullen, 2003). However, there is still no consensus or clear
evidence regarding the number of stages a firm experiences (Beverland, 2001; Phelps et al.,
2007; Rutherford et al., 2003). “While in principle all theories agree that growing firms
developed through a series of stages, there was little agreement on the number of stages
(ranging from 2 to 11, with the majority of theories having 3–5 stages) or on the detail of each
stage” (Beverland, 2001: 184). For instance, Levie and Hay (1998) identified 63 different
published stages models, and Phelps et al. (2007) reviewed 33 Life-cycle Literature and found
the number of stages ranging between two and ten, with the majority (10) indicating four stages.
In his phases of evolution and revolution, Greiner (1972) identifies five periods each
characterised by a dominant management style used to achieve growth: creativity (leadership),
direction (autonomy), delegation (control), coordination (red tape) and collaboration. Greiner
(1997: 9) later added that “a sixth phase may be evolving in which growth depends on the
design of extra-organizational solutions, such as creating a holding company or a network of
alliances and cross-ownership”.
Stage models have been criticised for their logic that does not only divert attention from
the context of change, and deemphasize individual firm differences, but also downplay the role
of strategic choice (Stubbart & Smalley, 1999). To this end, stage models are unsatisfactory
because they tend to mitigate both the context and the decision-making elements of strategic
choice, and undermine the uniqueness of each organisation (Stubbart & Smalley, 1999). In fact,
it has been observed that all the recent large-scale empirical evidence has shown that firms do
not develop according to a pre-set sequence of stage, instead, they evolve through their own
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unique series of stable and unstable states related to managerial problems (Levie & Hay, 1998;
Phelps et al., 2007).
Based on the above observations, Phelps et al. (2007) proposed a framework for the
growth of firms based on states rather than stages, and its application to organisational analysis
is gathering momentum (Gupta et al., 2013; Levie & Hay, 1998; Majumdar, 2008; Phelps et
al., 2007; Quinn & Cameron, 1983; Rutherford et al., 2003; Stubbart & Smalley, 1999). Phelps
et al. (2007) suggest that firm growth is complex, path dependent and unique to each firm and
this could be best understood using a two dimension framework related to the managerial
problems that growing firms face. The first dimension consists of ‘tipping points’, which are
the problems faced by the firm. ‘Tipping points’ are critical points in an evolving situation,
before which relative stability is the condition, but after which a large change is observed
(Phelps et al., 2007). These are the consequence of environmental changes, and they depend
on the specific context of the firm in its environment. Therefore, in order to keep on growing
“a firm must successfully resolve the challenges presented by the tipping point. To do this, it
must have the capability to find new knowledge suited to resolving the new challenges, and the
ability to implement this knowledge so that it succeeds in a competitive environment” (Phelps
et al., 2007: 8).
Phelps et al. (2007) identify six tipping points, namely people management, strategic
orientation, formalization of systems, new market entry as well as obtaining finance and
operational improvement, but emphasise that the growing firm is likely to encounter some or
all of these tipping points at some point or another, not necessarily at the same time, and without
following any formalised sequence. Phelps et al. (2007) argue that the second dimension
describes the firm’s ability to obtain and utilize new knowledge to successfully resolve the
challenges presented by tipping points. They suggest that firms are differentially able to
acquire, assimilate, transform and apply knowledge to navigate tipping points, even when they
operate in the same environment (Majumdar, 2008). These six tipping points are major areas
that could be addressed separately. Therefore, this paper is the initial attempt to address WHL
tipping points by starting with the firm’s strategic orientation. In doing so, the paper
investigates WHL’s strategic imperatives, specifically seeking an understanding of how WHL
expands its footprint through vertical integration, diversification, acquisitions, strategic
alliances and partnerships, as well as downscoping.
Methodology
This is a case study of WHL. Case studies are widely used in organizational studies
(Kohlbacher, 2006) and tourism research (Beeton, 2005; Khalil Zadeh, Khalilzadeh, Mozafari,
Vasei & Amoei Ojaki, 2017) as forms of empirical inquiry on phenomena in which multiple
sources of evidence are used (Patton & Appelbaum, 2003). Qualitative methods of data
collection largely dominate in case studies (Bonoma, 1985; Patton & Appelbaum, 2003).
Therefore, this study used document analysis to examine WHL’s strategic orientation.
“Document analysis is a systematic procedure for reviewing or evaluating documents - both
printed and electronic (computer-based and Internet-transmitted) material” (Bowen, 2009: 27).
Document analysis is extensively used in social science research (i.e. Bravo, 2016; Higgins et
al., 2016), and has been widely used in tourism studies, either as a single methods (Ramos,
Salazar & Gomes, 2000; Ruhanen, 2004) or as a combination with in‐depth interviews
(Boukas, Ziakas & Boustras, 2013; Buultjens, Ratnayake & Gnanapala, 2016; Horng & Tsai,
2012b) or multiple methods [observations, interviews, focus groups, empirical evaluation]
(Horng & Tsai, 2012a; Liu, 2014; MacDonald & Jolliffe, 2003; Woodhead, 2013; Zhang Qiu,
Yuan, Haobin Ye & Hung, 2013).
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Six possible sources of evidence for case studies have been identified namely
documents, archival records, interviews, direct observation, participant observation, and
physical artefacts (Bowen, 2009; Patton & Appelbaum, 2003; Yin, 2003). Previous studies
using document analysis have made use of public data sources [Edgar, Lexis/Nexis Academic
Universe, and company and investor-relations websites] (Holder-Webb, Cohen, Nath & Wood,
2009); annual reports of listed companies (Lee et al., 2018); printed or electronic publications
and organisations’ websites (Kivimaa, 2014); company websites, and press releases (Baggio,
2003; Holder-Webb et al., 2009; Rus & Negruşa, 2014).
This study used published company texts. These texts were data about the firm
(Saunders, Lewis & Thornhill, 2007; Veal, 2011). These data included annual reports,
newspapers, company websites and other published documents. Annual reports have been seen
as very useful sources of information, mainly because managers of companies commonly
signal what is important through the reporting mechanism (Ayton, Carey, Joss, Keleher &
Smith, 2012; Guthrie, Petty, Yongvanich & Ricceri, 2004; Josiah, Gough, Haslam & Shah,
2014; Josiah, Themba & Matenge, 2016). Information used in this study was accessed from
June 2016 to February 2018. These included WHL’s annual reports published between 2010
and 2017, documents relating to acquisitions and collaborations, and analysis of newspapers
articles, and websites of both WHL and its subsidiary companies. The data was then organised
into major strategic themes as shown below.
WHL’s strategic orientation
Although strategic orientations have been of interest in the literature, there is still no consensus
on what it is (Jantunen, Nummela, Puumalainen & Saarenketo, 2008). Strategic orientation
concerns itself with the decisions that firms make to achieve superior performance (Slater,
Olson, & Hult, 2006). Is it the guiding principle that influences a firm's marketing and strategy-
making activities (Noble, Sinha & Kumar, 2002; Theodosiou, Kehagias & Katsikea, 2012),
and strategies implemented to create the proper behaviours that lead to superior performance
(Theodosiou et al., 2012). Strategic orientations refers to the processes, practices, principles
and decision-making styles that guide firms’ activities (Jantunen et al., 2008; Wiklunda &
Shepherd, 2005). Strategic orientation is concerned with the decisions that businesses make to
achieve superior performance and therefore “defines the broad outlines for the firm’s strategy
while leaving the details of strategy content and strategy implementation to be completed”
(Slater et al., 2006: 1224).
A number of facets of strategic orientation have been identified in the literature
(Ferraresi, Quandt, dos Santos & Frega, 2012; Gatignon & Xuereb, 1997; Jantunen et al.,
2008), i.e. market orientation (Grinstein, 2008; Hult, Ketchen & Slater, 2005; Hurley & Hult,
1998; Lings & Greenley, 2009; Slater et al., 2006; Wang, Hult, Ketchen & Ahmed, 2009);
entrepreneurial orientation (Covin & Lumpkin, 2011; Lechner & Gudmundsson, 2014; Rauch,
Wiklund, Lumpkin & Frese, 2009; Wales, Gupta & Mousa, 2013); knowledge management
orientation (Ferraresi et al., 2012; Wang et al., 2009); pricing orientation (Liozu & Andreas,
2013); competitor orientation (Armstrong & Collopy, 1996; Zhou, Brown, Dev & Agarwal,
2007); learning orientation (Baker & Sinkula, 1999; Celuch, Kasouf & Peruvemba, 2002); and
technology orientation (Halac, 2015).
This paper identifies WHL’s strategic orientation as largely entrepreneurial.
Entrepreneurial orientation, defined as “the strategy-making processes, structures and
behaviours of firms characterised by innovativeness, proactiveness, risk-taking, competitive
aggressiveness and autonomy, facilitating the pursuit of opportunities” (Lechner &
Gudmundsson, 2014: 36). This is shown in WHL’s four main strategic imperatives:
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diversification using vertical integration, subsidiary strategy, acquisitions, and partnerships and
strategic alliances. Collectively, these strategies have shaped WHL’s growth over the past 34
years (1983 – 2017), therefore accounting for the company’s performance over these years.
The following sections deal with these strategies, and subsequently arguing that these strategies
account for WHL’s growth from a loss of BWP4,967,000 to BWP62,751,000 after tax in 2017.
Study context
WHL began its operations as Wilderness Safaris in Botswana in 1983 (2010a), focusing its
operations on safaris in wild, pristine and remote areas (WHL, 2010a, 2010b). It started by
offering “journeys and experiences to the discerning globally caring travellers” (WHL, 2010b:
14). It became Wilderness Holdings Limited in 2004 prior to Listing in 2009, and its acquisition
of Wilderness Safaris Investment and Finance (Proprietary) Limited [WSIF] (WHL. 2010b).
It was listed on the BSE with a secondary listing on the JSE on 8 April 2010 (WHL, 2010a;
2010b). Ever since, WHL has grown significantly to become a major international tourism
business participating in major markets in Africa (WHL, 2015). This growth was propelled by
a robust vertical integration model supported by acquisitions of subsidiary companies, strategic
alliances, and partnerships as corporate level strategies for market entry in international
markets (WHL, 2010b, 2016a). The Wilderness Holdings Limited Group has become a
diversified company made up of Wilderness Holdings, WSIF and all their subsidiaries,
associates, joint ventures and partnerships.
Ever since its formation in 2010 WHL’s strategic orientation has emphasised a business
model that is vertically integrated and consisting of the following key businesses within the
value chain: Safari consulting (tour operating and destination management); Transfer and
touring (air and road); Camp, lodge and safari exploration operator; and Finance and asset
management business. WHL emphasise that “as a listed entity Wilderness will be well-placed
to exploit profitable acquisition opportunities as they arise” (WHL, 2010b). The eight reviewed
WHL annual reports emphasise a business model that is vertically integrated with acquisition
as a strategy for growth.
Figure 1 shows that since 1983, WHL has reached many important business milestones
through acquisitions and direct expansion into Kenya, Namibia, Rwanda, Seychelles, South
Africa, Zambia and Zimbabwe, using a business model that emphasises vertically integration,
supporting the three “strategic pillars” of the Wilderness business: Tourism; Conservation; and
Awareness (WHL, 2012). This vertical integration has been on safari consultancy; camp,
lodges and safari explorations; finance and asset management; transfer and touring; and
training as shown in Table 1. Since 2010, WHL’s strategic orientation was based on two
fundamental growth strategies: internal and external growth strategies. These were blended
together over the years to achieve two strategic orientation imperatives: gaining market share
and expanding its footprint. Over the years WHL has focused on: consolidation of the industry
(WHL, 2011, 2012), gaining market share, increasing its footprint (Wilderness Holdings
Limited, 2011, 2012, 2013, 2014, 2015), increasing utilisation of existing capacity;
productivity improvements (WHL, 2013, 2014, 2015), growth of the business, brand
development, quality of products and services, strength of trade relationships, and
sustainability of operations (WHL, 2016b; 2017). The basis of expansion of its footprint, and
gaining market share is its diversification strategy based on the company’s model of vertical
integration. This strategy is supported by acquisitions and calculated downscoping.
916African Journal of Hospitality, Tourism and Leisure, Volume X (X) - (2020) ISSN: 2223-814X
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Figure 1: WHL Timelines from 1983 to 2017
Sources: (Wilderness Holdings Limited, 2010a, 2011, 2012, 2013, 2014, 2015, 2016b, 2017)
Diversification strategy
Firms are considered diversified if they concurrently are active in more than one business
(Helms, 2006; Nayyar, 1992). Diversification strategy has been seen as an important
component of strategic management of a firm (Palepu, 1985). Helms (2006), maintains that
diversification strategies are used to expand an organization’s operations by adding markets,
products, services, or stages of production to the existing business. Considerable evidence
underscores the relationship between a firm’s diversification strategy and its economic
performance (Delios & Beamish, 1999; Palepu, 1985). Using meta-analytic data drawn from
55 previously published studies, Palich, Cardinal and Miller (2000: 155) concluded that
“performance increases as firms shift from single business strategies to related diversification,
but performance decreases as firms change from related diversification to unrelated
diversification”.
The Wilderness business diversification strategy is based on the company’s model of
vertical integration. “Vertical integration exists when a company produces its own inputs
(backward integration) or owns its own source of output distribution (forward integration)”
(Hitt, Ireland & Hoskisson, 2007: 179). WHL’s vertical integration strategy consists of the
following key businesses within the value chain: Safari consulting (tour operating and
destination management); Transfer and touring (air and road); Camp, lodge and safari
exploration; and Finance and asset management business (WHL, 2010a; 2010b). These tourism
activities were undertaken through five main trading brands: Wilderness Safaris, Wilderness
Adventures, Wilderness Explorations, Wilderness Air and the Wilderness Collection (WHL,
2011).
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Subsidiary strategy
Global challenges create incentives for multinational corporations (MNCs) to change their
organizational structures and strategies (Gammelgaard, McDonald, Stephan, Tüselmann &
Dörrenbächer, 2012), leading to a proliferation of subsidiaries around the world (Delany,
2000). Subsidiaries have been used as mechanisms for market entry (Ben_Youssef & Hoshino,
2007; Youssef & Hoshino, 2003). A subsidiary company is an entity is subordinate to the parent
firm and might work under orders from the parent firm’s corporate office. Since 2010, WHL
has maintained a substantial number of subsidiary companies in four sector: Safari consultancy;
Camp, lodges and safari explorations; Finance and asset management; and Transfer and
Touring. Table 1 shows that the majority of these subsidiaries have been in Camp, lodges and
safari explorations, and Transfer and Touring, with very few in Training, and Safari
consultancy. The average number of Camp, lodges and safari explorations subsidiaries is 34.5
(51.1%) while Training is 0.6 (0.8%). Between 2010 and 2017, WHL has managed an average
of 67.9 subsidiaries with the highest number in 2011 (80) and the lowest in 2016 (60). In
addition, WHL has maintained an average of 9.1 (13.3%) of these subsidiaries not trading with
the highest number of non-trading companies in 2011 (13 [16.3%]).
Table 1 also shows that effective holding of WHL in these subsidiaries ranged between
less the 50% holding (15.5 [10.8%]) and 100% holding (31.6 [46.6%). The majority of these
subsidiaries were 100% owned by WHL. In addition, the majority of these subsidiaries are
operating in international markets. An average of 47.5 (71.5%) of these subsidiaries are owned
outside Botswana. This confirms Ben_Youssef and Hoshino (2007) and Youssef and Hoshino
(2003) observation regarding the use of subsidiaries as mechanisms for market entry.
Table 1: WHL active subsidiary and associate companies from 2010 to 2017
Year Tourism Sector
A B C D E F
No % No % No % No % No % No %
2010 4 5.6 36 50.0 8 11.1 12 16.7 2 2.8 10 13.9
2011 5 6.3 39 48.8 7 8.8 15 18.8 1 1.3 13 16.3
2012 4 5.3 37 48.7 9 11.8 12 15.8 2 2.6 12 15.8
2013 4 6.1 33 50.0 9 13.6 12 18.2 0 0.0 8 12.1
2014 3 4.9 31 50.8 9 14.8 12 19.7 0 0.0 6 9.8
2015 3 4.8 34 54.8 8 12.9 11 17.7 0 0.0 6 9.7
2016 2 3.3 31 51.7 8 13.3 10 16.7 0 0.0 9 15.0
2017 2 3.1 35 53.8 8 12.3 11 16.9 0 0.0 9 13.8
Average 3.4 4.9 34.5 51.1 8.3 12.3 11.9 17.6 0.6 0.8 9.1 13.3
Table 1 Continue
Year Effective holding Subsidiary location TotalAfrican Journal of Hospitality, Tourism and Leisure, Volume X (X) - (2020) ISSN: 2223-814X
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2015 7 11.3 18 29.0 29 46.8 17 27.4 45 72.6 62
2016 6 10.0 16 26.7 29 48.3 17 28.3 43 71.7 60
2017 5 7.7 25 38.5 28 43.1 17 26.2 48 73.8 65
Average 10.8 15.5 20.9 30.8 31.6 46.6 19.5 28.6 47.5 71.5 67.9
A = Safari consultancy; B = Camp, lodges and safari explorations; C = Finance and asset management; D = Transfer and Touring; E
= Training; F = Non-trading
Sources: (Wilderness Holdings Limited, 2010a, 2011, 2012, 2013, 2014, 2015, 2016b, 2017a
Acquisitions
WHL’s strategy is aimed at exploiting profitable acquisition opportunities in land or safari tour
or lodge businesses (WHL, 2010b). Global investment in acquisitions has reached
unprecedented levels in recent years (Barkema & Schijven, 2008; Haleblian, Devers,
McNamara, Carpenter & Davison, 2009). Acquisition relates to the purchase of a controlling
or 100% interest in another firm with the intent of making the acquired firm a subsidiary
business within the portfolio of the other (Coulter, 2008; Hitt et al., 2007). WHL acquired
Wilderness Safaris Investment and Finance (Pty) Ltd (WSIF) (incorporated in South Africa)
on 8 April 2010 (WHL, 2010a; 2010b) at BWP96.8 million to become one of its wholly owned
subsidiary companies. At the time of acquisition, WSIF had 72 subsidiary companies excluding
Tess and Trev Travels (Pty) Limited, in various sectors of the tourism industry (Safari
consultancy [4]; Camp, lodges and safari explorations [36]; Finance and asset management [8];
Transfer and touring [12]; Training [2]; and Non-trading [10]) incorporated in Bermuda,
Botswana, Luxemburg, Malawi, Namibia, Seychelles, South Africa, Zambia, and Zimbabwe
(Wilderness Holdings Limited, 2010a). Prior to the acquisition, both WHL and WSIF had the
same beneficial shareholders in the same percentage shareholding, and had been managed as
one business (WHL, 2010b). This was due to historical regulatory reasons that existed at the
time. However, the acquisition meant that the company was restructured to make WSIF a
wholly-owned subsidiary of WHL. On 24 July 2012, Okavango Wilderness Safaris
(Proprietary) Limited, a wholly owned subsidiary of WHL, acquired a 50% shareholding in
Santawani Partnership (Proprietary) Limited (WHL, 2013). The Okavango Wilderness Safaris
(Proprietary) Limited further acquired an additional interest of 15.82% in Baobab Safari
Lodges (Proprietary) Limited in 2014.
In 2016, WHL acquired 51% stake in Governors’ Camp Group of Companies (Kenya
and Rwanda) (WHL, 2016a), following a strategic move to expand the company’s geographic
footprint into other identified regions in Africa. This meant acquiring 51% of the shares and
shareholder loan accounts of “Musiara Limited, Governors’ Aviation Limited, Goodison
Ninety One Limited, Goodison Forty Two Limited (all registered and operating in Kenya); and
Governors’ Camps Rwanda Limited and Governors ‘Safaris Rwanda Limited (both registered
and operating in Rwanda)” (WHL, 2016a: 1). Governors’ Camp Group of Companies was
founded in 1976, and had developed to become “one of the oldest and most iconic safari brands
in Africa” (WHL, 2016a: 1). At the time of the acquisition, it owned and operated a number of
award-winning safari camps and lodges in East Africa's best game viewing areas. “The location
in the Masai Mara National Reserve in Kenya has been featured in multiple BBC and other
wildlife documentaries. The brand was expanded into Rwanda in 2007, through the addition of
Sabyinyo Silverback Lodge, a mountain gorilla trekking offering in Virunga National Park”
(WHL, 2016a: 1).
The acquisition of the Governors’ Camp Group diversified WHL’s market base from
Southern Africa to East Africa, using a well-known local brand and management who are
familiar with local markets and conditions, with potential synergies: Firstly, the Governors’
main target market is Europe, whereas WHL’s main source market is the United States. The
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acquisition was therefore seen as creating cross selling opportunities. Secondly, the acquisition
would allow the two companies to share best operating practises, in terms of lodge operations,
aviation and reservations. Thirdly, both companies were committed to a program that would
boost future occupancies and revenue by renovation of the lodges and targeted marketing
expenditure (WHL, 2016a).
WHL pursues related acquisitions [where relatedness is defined in terms of resource or
product-market similarity] (Barkema & Schijven, 2008; King, Dalton, Daily & Covin, 2004)
with potential strategic fit or similar strategic characteristics (Hitt, Harrison, Ireland, & Best,
1998; King et al., 2004) between itself and the acquired firms (WHL and WSIF). Relatedness
is assumed to have positive effect on post-acquisition performance of the acquiring firms (King
et al., 2004) with the possibility of enhancing WHL’s value creation (market power, efficiency,
and resource redeployment) (Haleblian et al., 2009). Potential challenges arise out of these
acquisitions. The first challenge relate to debt. The BWP96.9 million used to acquire WSIF
were of the Public Offer when the company was listed on the BSE and the JSE. As for the
acquisition of the Governors’ Camp Group, a total of US$6.2 million was used to purchase for
shares and shareholder loan accounts in cash (WHL, 2010b, 2016a). The second challenge
relate to integration difficulties synonymous with acquisitions. WHL and WSIF have been
managed together as one business for the entire life of the business prior to acquisition and this
minimised any integration problems. In the Governors’ Camp Group, the Executive
Management remained with the Governors’ Camp Group business after the acquisition as a
strategy to minimise integration difficulties. Most acquisitions create a larger firm that could
help increase its economies of scale, hoping that this would lead to more efficient operations
(Hitt et al., 2007). However, “the additional costs required to manage the larger firm will
exceed the benefits of the economies of scale and additional market power” (Hitt et al., 2007).
At the time of acquiring the Governors’ Camp Group business, WHL and WSIF had 60
subsidiary and associate companies (Safari consultancy [2]; Camp, lodges and safari
explorations [31]; Finance and asset management [8]; Transfer and touring [10]; and Non-
trading [9]) incorporated in Botswana, Congo, Namibia, Seychelles, South Africa, Zambia, and
Zimbabwe. Table 1 and Figure 1 show that the following year (2017), the number of subsidiary
companies increased to 65, but did not have a significant effect on profitability.
Partnerships and strategic alliance as strategies for growth
The tourism literature underlines the significance of strategic alliances and partnerships in
achieving organizational goals (Morrison, Lynch & Johns, 2004; Pansiri, 2013; Selin &
Chavez, 1995). Strategic alliances are “purposive tactical arrangements between two or more
independent organisations that form part of, and is consistent with participants’ overall
strategy, and contribute to the achievement of their strategically significant objectives that are
mutual beneficial” (Pansiri, 2005: 1099). Strategic alliances include cooperative arrangements
such as: joint ventures; licensing; franchises; marketing and distribution agreements;
production and manufacturing alliances; research and development contracts; technology
development coalitions; production and manufacturing alliances; research and development
contracts; inter-organizational collaboration; and public-private partnership (Pansiri, 2005,
2013).
Generally, WHL work with a large number of partners based on complementarity,
ranging from conservation NGOs to ecotourism or sustainability associations (Wilderness
Safaris, 2016). WHL alliances and partnerships were designed at three levels. The first level
are the partnership entered into at a WHL level. The second level are those entered into at the
business level (by Wilderness Safaris and Wilderness Air) and the last group are those alliances
920African Journal of Hospitality, Tourism and Leisure, Volume X (X) - (2020) ISSN: 2223-814X
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formed by WHL’s subsidiaries. WHL strategic alliances can be classified into two: First group
are the formal relationships which include any contractual agreements and take the following
forms: employment and the associated payment of wages and salaries; joint ventures of various
kinds; formal contracts with local suppliers; contractual agreements with communities in terms
of employment, suppliers, and formal, as well as on-the-job skills training and development
(WHL, 2013). The second are those which are informal relationships which are not
contractually binding and these include: the Children in the Wilderness programme;
community projects; sale of locally-made curios to guests; provision of administrative, and
logistical and other support to NGOs, academic researchers and local communities (WHL,
2013).
Since 2010, WHL had 17 formal relationships in five countries (Namibia; South Africa;
Botswana; Republic of Congo; Rwanda). Table 2 shows that three of these were joint ventures;
the Damaraland Camp and Doro Nawas Camp in Namibia, and Vumbura Plains, Little
Vumbura, Duba Plains in Botswana. These joint ventures have existed since 2011 and are in
the form of equity, revenue sharing and traversing fees. HHL entered into joint Ventures in
order to: create high-income, low-impact sustainable tourism ventures; train members of the
local community in all aspects of tourism; create immediate employment in high
unemployment areas; uplift the local area financially and socially; and allow local wildlife
numbers to increase and stabilize) (WHL, 2011). Table 2 also shows that WHL has entered
into tripartite agreements with government and community in Namibia (Palmwag Lodge,
Palmwag Campsite, Desert Rhino, Camp Hoanib Camp; Serra Cafema; Desert Rhino, Hoanib
Skeleton Coast) and South Africa (Pafuri Camp; Rocktail Beach Camp). WHL is also involved
in a number of partnerships with various communities in Namibia (Serra Cafema); Botswana
(Banoka Bush Camp; Wilderness Tented Camp: Moremi Tented; and Banoka Bush, Khwai
Discover, Khwai Adventurer, Wilderness Tented); and Rwanda (Bisate; Sabyinyo Silverback).
As Table 2 shows, most of these community partnerships are with community trusts where
annual lease fees is paid by WHL.
Public Private Partnerships
Over the years, WHL has also emphasized the use of Public Private Partnerships (PPPs). PPPs
are a variety of long-term contractual arrangements between public agencies and private
entities for the design, construction, financing, and operation of public infrastructure by the
private partner, with payments from taxpayers or user fees through a defined concession term
(Chen, Daito & Gifford, 2016). They are agreements “between the government and one or more
private partners (which may include the operators and the financiers) according to which the
private partners deliver the service in such a manner that the service delivery objectives of the
government are aligned with the profit objectives of the private partners and where the
effectiveness of the alignment depends on a sufficient transfer of risk to the private partners”
(Navarro-Espigares & Martín-Segura, 2011: 559; Ross & Yan, 2015: 448-449).WHL is
involved in a number of PPPs with National Park agencies in the regions they are operating
particularly Malawi, Zambia and Zimbabwe where they have camps in such parks. WHL pays
lease fees and bed-night levies to park authorities. WHL sees such partnerships as important
for a number of reasons: they enhance efficiency as they combine the business and marketing
skills of the private sector partner with the land management skills of the protected area
agencies/parks authorities; bring together the expertise of the relevant National Parks agency
in biodiversity conservation and WHL in ecotourism and business; and enhance skills transfer,
training and development (WHL, 2011, 2012, 2013, 2014, 2015).
921African Journal of Hospitality, Tourism and Leisure, Volume X (X) - (2020) ISSN: 2223-814X
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Table 2: Joint venture and other partnerships
Engagement
Country Name of camp Nature Details Annual
Value
(BWP)
Namibia Damaraland Camp Joint venture The community members were given 10% of ownership 2 337 921
annually. Once they owned 100% of the camp they sold
60% back to Wilderness. They currently have the
remaining 40% stake in the camp.
Doro Nawas Camp Joint venture A 55:45 partnership between Wilderness and the Doro 2 777 011
!Nawas Conservancy
Skeleton Coast Voluntary Voluntary community levies are paid to Puros, Orupembe, 266 831
Camp community levies Okondjombo and Sanitatas Conservancies. Fees are also
[Discontinued paid annually to the Ministry of Environment (MET).
in2013]
Lianshulu [ Informal community Balyerwa Conservancy are paid traversing and bednight 105 660
Discontinued in agreement fees.
2012]
Palmwag Lodge Public private Wilderness pays the ‘Big 3’ (Torra, Anabeb and Sesfontein 773 585
Palmwag Campsite community Conservancies) 10% of turnover at Palmwag Lodge, Desert
Desert Rhino Camp partnership Rhino Camp and Hoanib Camp. 20% of turnover is paid
Hoanib Camp for the Palmwag campsite. Wilderness pays the Ministry of
Environment and Tourism (MET) concession fees to
operate in the Palmwag concession area.
Serra Cafema Private sector Wilderness pays the Marienfluss Conservancy 8% of 454 364
community turnover as well as a fixed annual fee.
partnership
Desert Rhino, Public private Wilderness operates Desert Rhino Camp and Hoanib 976 523
Hoanib Skeleton community Skeleton Coast Camp and pays a minimum fee per annum
Coast partnership of N$1 200 000 (BWP1 025 641) to the Big 3 (Torra,
Sesfontein and Anabeb) conservancies.
South Pafuri Camp Public private A tripartite agreement exists between Wilderness, 613 208
Africa community SANParks and the Makuleke community, where
partnership Wilderness pays 8% of turnover to the community.
Rocktail Beach Public private A partnership exists between Wilderness and the approx. 113
Camp community KwaMpukane Community Trust. A BEE partner owns 208
partnership, 10% and 17.5% is owned by the KwaMpukane Community
including a joint Trust. 8.5% of revenue, as well as bednight levies, are paid
venture with the to the community Trust. 8.5% of revenue is paid to
community iSiMangaliso Wetland Authority, and annual turtle fees are
paid.
Botswana Vumbura Plains, Joint venture A joint venture partnership exists where lease fees are paid 2 500 000
Little Vumbura, to the community annually.
Duba Plains
Banoka Bush Camp Private sector Wilderness pays the Khwai Development Trust an annual 2 500 000
community lease fee.
partnership
Wilderness Tented Private sector Wilderness pays the Sankuyo Community Trust an annual 300 000
Camp [ community lease fee. This is a sub-lease from another partner.
Discontinued in partnership
2013]
Moremi Tented Private sector Wilderness pays the Sankuyo Community Development 300 000
community Trust an annual lease fee.
partnership
Banoka Bush, Private sector Wilderness pays the Khwai Development Trust (KDT) an 2 821 154
Khwai Discover, community annual lease fee.
Khwai Adventurer, partnership
Wilderness Tented
Republic of Ngaga Lango Private sector- 5% of accommodation revenue is paid to the Odzala- 61 600
Congo NGOcommunity Kokoua Foundation – a partnership between African Parks
partnership and the Congolese Government. African Parks is currently
in consultation with the 70 local village associations to
identify socio-economic development needs which will
lead to the provision of education and health facilities in
the villages surrounding the park.
Rwanda Bisate Private sector 27.88 hectares of land was procured from community 4 897
community members. This land will be reforested and a camp will be
partnership built here, with the aim to eventually connect this land to
Volcanoes National Park.
922African Journal of Hospitality, Tourism and Leisure, Volume X (X) - (2020) ISSN: 2223-814X
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Sabyinyo Silverback Private sector A partnership between Governors’ and SACOLA. 7.5% of 3 889
community all revenue, plus a community
partnership fee of USD92 per bednight (collected from guests), is paid
to SACOLA
Sources: (WHL, 2010a, 2011, 2012, 2013, 2014, 2015, 2016b, 2017)
Turnaround or stability strategies
To avoid problems associated with acquisitions, WHL has synonymously embarked on
downscoping as a restructuring strategy. Restructuring strategies are a global phenomenon,
implemented by firms as they respond to changes in their external and internal environments
(Hitt et al., 2007; Hoskisson, Cannella, Tihanyi & Faraci, 2004). The three restructuring
strategies that firms use are downsizing, downscoping and leveraged buyouts (Hitt et al., 2007).
WHL has used downscoping as a restructuring strategy. Downscoping refers to strategic
divestiture, spin-off, or some other means of eliminating businesses that are unrelated to the
firm’s core businesses (Hitt et al., 2007; Hoskisson, Johnson & Moesel, 1994; Warui, Kimemia,
Mungara, Bateyo & Njau, 2015; Zyglidopoulos, 2005). While acquisition may lead to over-
diversification, downscoping helps a firm to reduce the diversity of businesses in its portfolio
(Hitt et al., 2007), hence it is seen as a corrective action to a firm’s over-diversification
(Zyglidopoulos, 2005). Downscoping strategy has been associated with positive effects on
market performance and innovation activities (Ishimitsu & Fujiwara, 2014); cost savings
(Heugens & Schenk, 2004); and firm performance (Warui et al., 2015).
WHL has used downscoping in order to refocus on its core business. Figure 1 shows
that in 2010, the company disposed of the assets of Duba Plains camp in Botswana at USD4,5
million (BWP33 million) (Wilderness Holdings Limited, 2010a), and North Island Company
Limited in Seychelles at BWP59 million in the form of dividends (WHL, 2011: 111). The
company also maintains that “excess capacity was created in some countries during the boom
years preceding the global financial crisis” (WHL, 2013: 10). However, due to reduced levels
of demand in some countries and markets, WHL was forced to re-size some of its businesses
by selling or closing a number of camps in Zambia and Namibia in particular; right-sizing some
of the country offices, following these camp sales/closures; and consolidating the Zambia and
Zimbabwe country offices into a single regional office in Victoria Falls and closing the Lusaka
office (WHL, 2013, 2014).
To further consolidate its core business to ensure a solid foundation for future growth
opportunities, WHL ended its operating and marketing agreement for Odzala Wilderness
Camps in the Republic of Congo, disposed its investment in the Malawian business (Central
African Wilderness Safaris Limited) which operated six camps, and sold Pafuri Camp (South
Africa) (WHL, Wilderness Holdings Limited, 2015: 25). WHL disposed of disposed of its
56% interest in Lianshulu Lodge (Proprietary) Limited (WHL, 2013). WHL also closed
Palmwag, Skeleton Coast and Kulala Wilderness Camp in Namibia, and Lufupa Bush Camp,
Kalamu Star Beds, Kapinga, Chinengwe Riverbed and Kalamu Lagoon Camp in Zambia in
2013 (WHL, 2013). Table 2 also shows that WHL discontinued some of its partnerships:
Skeleton Coast Camp; Wilderness Tented Camp (2013); and Lianshulu (2012). Table 2 also
shows that WHL discontinued some of its partnerships: Skeleton Coast Camp; Wilderness
Tented Camp (2013); and Lianshulu (2012).
Performance
Previous research has underscored the impact of strategic orientation on firm performance
(Gatignon & Xuereb, 1997; Slater et al., 2006). For instance, Slater and Narve (1993) as well
923African Journal of Hospitality, Tourism and Leisure, Volume X (X) - (2020) ISSN: 2223-814X
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as Gatignon and Xuereb (1997) observed that strategic orientation has a positive effect on firm
performance.
Table 3: WHL performance from 2009 to 2017 (BWP’000)
2009 2010 2011 2012 2013 2014 2015 2016 2017
Revenue 986390 868139 948607 1066243 1205074 1401206 944586 935087 1107467
EBITDA 105558 115228 77417 77781 108901 151168 181701 199310 208867
PBT 14863 81544 111018 16019 32520 77521 108695 120369 101374
Profit/(loss) -4967 48022 89069 12842 24548 43215 85338 62304 79810
Corresponding Percentage change
Revenue -12.0 9.3 12.4 13.0 16.3 -32.6 -1.0 18.4
EBITDA 9.2 -32.8 0.5 40.0 38.8 20.2 9.7 4.8
PBT 448.6 36.1 -85.6 103.0 138.4 40.2 10.7 -15.8
Profit/(loss) -1066.8 85.5 -85.6 91.2 76.0 97.5 -27.0 28.1
Key: EBITDA: Operating profit before depreciation, amortisation and goodwill impairment; PBT: Profit before taxation;
Sources: (Wilderness Holdings Limited, 2010a, 2011, 2012, 2013, 2014, 2015, 2016b, 2017)
WHL’s performance was assessed using related financial variables. Table 3 shows WHL’s
annual revenue; Operating profit before depreciation, amortisation and goodwill impairment
(EBITDA); Profit before taxation (PBT); and Profit/loss) for the period between 2009 and
2017. WHL’s revenues have been fluctuating over the nine (9) year period. For instance
revenue declined by 32.6% in 2015. The 1% decline in 2016 was accompanied by a decline in
profits 27%. It can therefore be argued that increased levels of diversification, partnerships and
acquisitions do not necessarily translate into improved revenue and profits.
Conclusion
Firm’s growth is complex. This is exemplified by WHL’s growth from an SME in 1983, to a
highly diversified multi-million dollar business by 2010. Since 2010, WHL has maintained its
diversity of firms with an average of 67.9 subsidiary and associate companies, most of which
were trading (between 83.7% and 90.3%). This study identified strategic orientation and new
market entry as ‘tipping points’ propelling this growth. The complexity of the tourism
industries requires complexity in the manner in which tourism businesses conducts their affairs.
WHL’s strategic orientation has been based on diversification through vertical integration. As
Table 1 shows, WHL vertically integrated into safari consultancy; camp, lodges and safari
explorations; finance and asset management; transfer and touring; and training. This mix has
been maintained over the years with the dominant business being camp, lodges and safari
explorations accounting for 48.7% to 53.8% between 2010 and 2017. This study has also shown
that WHL has managed its subsidiary and associate companies at different levels of effective
holding, with an average of 46.6% 100% ownership. Phelps et al. (2007) has identified six
tipping points, namely; people management, strategic orientation, formalization of systems,
new market entry, obtaining finance and operational improvement. This study has analysed
only two: strategic orientation, and new market entry. The analysis seem to suggest that new
market entry is a consequence of strategic orientation. As a form of overcoming entry barriers
in new international markets, WHL used acquisitions as part of its strategic orientation. Future
case studies should look at other ‘tipping points’, namely people management, formalization
of systems as well as obtaining finance and operational improvement to understand the
behaviour of companies.
924African Journal of Hospitality, Tourism and Leisure, Volume X (X) - (2020) ISSN: 2223-814X
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Hoskisson et al. (2004) argue that highly diversified firms are likely to divest during
times of increased environmental uncertainty and pursue acquisitions when environmental
uncertainty is decreased. This is true with WHL which created “excess capacity” in some
countries during the boom years preceding the global financial crisis, but embarked on
downscoping when demand declined (WHL, 2013, 2014). Another point to consider is the
selectivity with which WHL pursues its acquisition and downscoping strategies. This is
particularly relevant to the purchase of Governors’ Camp Group where possible synergies
existed in sharing best operating practices, in terms of lodge operations, aviation and
reservations, and the sale of subsidiaries that are not core to the company business. This is
supported by Wu and Delios (2009) who maintain that “when considering the action of
portfolio restructuring, a firm’s manager can choose to refocus on the core business of the firm
via the divestment of unrelated business (downscoping) or choose to integrate operations
through the selective acquisition or establishment of businesses related to the core business
(asset expansion)” (Wu & Delios, 2009: 215). Also true is that acquisitions are more likely to
be followed by divestitures when targets were not in businesses highly related to those of the
acquirer (Montgomery, 1994). What this study has found out is the concurrency or
simultaneously acquisitions and downscoping. The implication of this is that WHL undertakes
a lot of studies on what companies to divest from, given the large number of its subsidiary
companies. It is also true that studies and preparatory work is needed before acquisition
decisions are made. In-depth studies are needed to understand how decisions for divestiture
and acquisition are actually reached given the multiple players involved and the factors for
consideration. Such studies may also shed light into how a company with such experience could
embark on failed acquisition such as the Air Botswana acquisition, and the subsequent effects
of such decisions.
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